For Immediate Release
January 8, 2001
Contact: Jim Berard
(202) 225-6260
WASHINGTON—Rep. James L. Oberstar, Ranking Democratic Member of the House Transportation and Infrastructure Committee, issued the following statement in response to reports of a pending merger between American Airlines and Trans World Airlines. Oberstar issued the statement from his home state of Minnesota:
The details of the proposed merger between American Airlines and TWA as reported in the press are preliminary. Much remains to be learned.
What we know about this proposed merger so far, however, illustrates the problems which I and many of my colleagues have raised about the merger of United and US Airways. We were concerned that the merger would trigger a round of further, defensive mergers by United's competitors. Today’s news suggests that the process has begun. American apparently feels impelled to develop its own merger proposals to reduce the potential advantages United would gain from acquiring US Airways.
I continue to be extremely concerned that acquisitions by our largest airlines will create pressures for other major airlines to engage in their own mergers, so that they will not be at a competitive disadvantage. Once this process starts, it is likely to reduce the industry to three major airlines that would be unlikely to compete vigorously. We would soon lose the low fares and other consumer benefits which we have gained from airline deregulation.
On the basis of what we know so far, American's proposals to participate in the United-US Airways merger do not overcome my objections to that merger. I opposed the original United-US Airways proposal because it would have created a United Airlines substantially bigger than its nearest competitors. The new proposal would reduce United’s growth somewhat, but the increase would still be substantial. At the same time, the new proposal would increase American's size and strength, particularly on the East Coast. The rest of the industry would see both American and United increasing their advantages. There would be great pressure for more defensive mergers.
Considered as a separate, independent proposal, American's acquisition of TWA raises problems of its own. There needs to be careful consideration of the effects on competition, both direct competition between the two carriers, and the effect that the merger would have on triggering defensive mergers by the rest of the industry. I have serious concerns on both issues, but will not take a final position until we have further details and analysis.